The National Water Commission (NWC) has released a report into water trading in the southern Murray-Darling Basin, finding that water markets helped the region remain productive, even during severe drought periods.

“Australia’s water markets have allowed water to be reallocated to where the need is greatest and reduced the impact of the drought on regional production. Water trade is playing a major role in achieving the National Water Initiative (NWI) objective of maximising the economic, social and environmental values of scarce water resources,” NWC Commissioner Laurie Arthur said.

“It is increasingly valued as a business tool and is now supported by the majority of the irrigators surveyed by the Australian Bureau of Agricultural and Resource Economics and Sciences for this report.”

The report confirms that the main drivers of hardship in the communities in the southern Murray-Darling Basin include drought, commodity prices and exchange rates, while water trading offsets these difficulties.

But water markets can deliver even more. Continuing reform will ensure that market structures provide greater efficiency, that participants have sufficient information to avoid uncertainty, and most importantly, that the remaining restrictions on trade are removed,” Mr Arthur said.

The report also assesses the impacts of Government policies in the area over the four year period ending in min-2011.

‘The millennium drought has had significant impacts on regional production and the proceeds from water trading sales have supported local economies and allowed many irrigators to reduce debt during that difficult time. Water purchased by the Australian Government is part of this trade and will benefit the environment,” Mr Arthur said.